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Whatever you do, you want to do it in a respectful way. Are you doing it for performance issues, or purely business reasons despite excellent performance? That will make a huge difference in how you approach it. If you are a large organization and you have policies and procedures for different aspects of your work, you may already have materials in place that can guide you. If you have a Human Resources office they can guide you through this.

If you are doing this for performance issues, make sure that the person has an up-to-date job description and that performance appraisals are recent and complete. That's the place to start, if you regularly have these things done. If performance issues have been noted, use that to have a discussion about how to improve, and a period of time during which the employee has a chance to improve. Then when the end of that period comes, if there is no or unsatisfactory improvement, it will be less difficult to bring up the need for termination. If you don't have performance appraisals, then you can have a frank discussion about performance, along with a period of time that you expect to see improvement. Then after that time, same as above.

If the issue is purely business and not performance, then just have a talk about the business problems that you are facing, and explain that some people have to be let go. Maybe the person will be willing to take a cut in pay, or possibly continue part time. If there is no way around termination and the issues are not performance related, give the person some lead time and assure that you will provide good referral letters when they are needed. I would give the person at least a month, if at all possible.

This is never easy, but when it is necessary it has to be faced. Make sure you stay within any limits of the law around such things; ask someone else who has a similar business as yours.

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